USA still has the best fundamentals of major economies. US still has most advanced technologies, best political system, rich resources compared to population size. The problem is Americans lie on these advantages and fool around too much in the last 20 or 30 years. The next 10 or 20 years will be hard to Americans, esp the lower class people, but it's also an opportunity to push forward those difficult reforms, esp in health care and education. China's economic fundamentals are still weak compared to most countries, but Chinese worked really hard and willing to sacrifice anything for economic growth for the last 30 years. The aging population will gradually slow down the economy and in 30 or 40 years, China will enter a long stagnation stage like Japan and Europe. America and China is like playing the teetertotter. When China goes up, America goes down. When America goes up, China goes down.
Howard, you and me on this board for quite some years, and we know each other's views. I could tell you had moderated quite a bit. Look around, you will see some of the replies to you could be more China-centric than you, like from the "Fen Qing" (Angry Youth).
I was paying special attention to the income numbers after you raised that figure. Here, at http://business.time...icle6937019.ece
there is a so-called World Bank number of $3000. Note this article is even-rounded, and it points out the fallacy of the Aesop's fable, namely, the rabbit (America) did not have to nap for the turtle (China) to catch up. It further states that "Global imbalances, historically, reflect conflicted monetary policies and sometimes end up in crises, in which creditor-export giants in the global economy pay a higher price than their debtor-import opposites." This was basically called the "Immiserizing Growth", which I put on my website since day one, as early as 1998. The end result of all this would be the rip-off of the Chinese masses when China's US$-denominated assets lost its value. In my opinion, the gangs on the Wall Street are the smartest people ever on this globe, whom the "gurus" in the Bank of China, no matter Harvard-educated or Stanford-educated, are no match with.
I casually flipped through some documents I saved in the past years, and came to this article written by Steve H. Hanke, a professor of Applied at Johns Hopkins University, and a senior fellow at the Cato Institute, on May 9, 2005http://www.cato.org/people/hanke.html
by Steve H. Hanke and Michael Connolly
Four years ago, Mr. Hanke basically said:
The effect of a yuan revaluation -- deflation and recession -- would even be more damaging to China than trade sanctions. We estimate that a 25% yuan revaluation against the dollar would result in a deflation of at least 15%. China would be forced to relive the terrible economic conditions induced by the 1930s yuan revaluation. In 1934, the U.S. Silver Purchase Act monetized silver. This effectively revalued the yuan by 24% because China was on the silver standard. The price of the yuan against the dollar went from 33 cents at the end of 1933 to 41 cents in 1935. As Milton Friedman concluded in his classic study "Monetary Mischief": "Because silver was China's money, the rise in the price of silver had produced a major deflation, which in turn had led to severely troubled economic conditions."
How do we decipher this? Hanke was apparently someone who went all his way to make sure that the rip-off of the Chinese masses by the Wall Street was to continue. Indeed, it continued till even now. What happened with China was that the currency was not freely exchangeable or convertible for the masses [but freely suitcase-packageable for the "entrepreneurs"]; any foreign exchange gain from the export was mandatorily surrendered to the government in return for the over-printed RMB; and the over-printed RMB and the inflation company exacerbated the poverty of the millions of working Chinese masses. There was no comparable between this scenario and the "silver purchase" of the 1930s. (Bright may have more insight on this.)
As a side note, I like to point out the pitfalls laid by the experts from think-tanks or institutions, including your professors. Johns Hopkins University, wedded to the Cato Institute, is a good example of how the strategy was formulated in the United States. For its proximity to the White House, you have those "professors" doing the front-running for the US government which was of course controlled by the Wall Street, such as Goldman Sachs. Back in the 1930s, this same institution, Johns Hopkins University, produced a core group of Soviet spies, including Owen Lattimore, from the American Committee for the Settlement of Jews in Birobidzhan [in the Soviet Siberia], sabotaged the cause of the Republic of China. Similar example would be agitations at the Pomona College. In 1920s, it was the cradle for such Comintern agents as Chen han-sheng. Today, Pomona College transformed itself a bit and created the so-called "Pacific Basin Institute" - an institution which is brewing some talents who might very well do similar harm to China in the long run. As a Chinese student studying or teaching in America, it is important to check out the background of your professor, as well as the teacher of your professor, before buying what you were taught about.
I don't know how you come to this conclusion in saying "When China goes up, America goes down. When America goes up, China goes down." Obama just said US-China could have a win-win relationship and does not have to be in a zero-sum game. You also seems to believe that the United States is on a down-sloping path. True that America had outsourced almost everything, not necessarily manufacturing or IT. (Check here for the outsourcing of medical treatment in Thailand, http://www.dailyfina...ace-medical-to/
) However, the entrepreneurs spirit, which was secured by the American political system, guarantees that the United States would always one step [if not ten years as the Times article suggested] ahead of the others. Also true that the American education institutions are staffed by immigrant-background professors. However, you need to know that majority of those converts pledged allegiance and loyalty to the United States when they obtained citizenship, and the only reason that they changed citizenship to be an American is because of the political system of the United States - which no matter how corrupt in the power structure as evidenced by the links between the White House and the Wall Street, did not infringe on the basic human rights of individuals.